An application that is implemented inside a WebBrowser with most functionality implemented on the server side (WebServer or ApplicationServer).

Web applications are often implemented with J2ee (jsp, servlets,...) CGI, AllaireColdFusion, ASP, and so on. 

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Other definition that was here before:

The module of the overall application that handles a user session, application flow, Web Page requests, navigation. This is as opposed to the StoredProcedures, EJBServer, and JSP Servlets although the JSP Servlets are part of the WebApplication technically, in our development environment we keep JSP Servlets separate.

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See http://virtualschool.edu/wap [BrokenLink] for articles and software for WAP, which has
proven far more productive than perl and/or JSP for my needs at least. Described
in the May 2001 Dr. Dobbs' Journal. -- BradCox

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There are some applicaltions that run completely locally but are designed like WebApplication's. An example is Yandex Personal Search [http://desktop.yandex.ru/how.xml] - an utility for local search of files, that runs residentally as a local HTTP server and is accessed by an HTTP link - so it looks like a popular Russian web search engine. Less precise example is DiffDaff [http://www.cyberpromote.de/software/diffdaff.htm] - a local file compare tool that produces output in an HTML page.

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I thought a WebApplication was precisely the opposite of the definition given at the top of this page: an application with most of its code implemented client side in JavaScript and using HTML/CSS for its UI, not requiring a server to be installed locally.. A web app should not require be able to perform its function with no internet connection, only requiring net access for data or code updates.

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Also see WebApplicationDesign, WebApplicationsAndXp, WebFormMethodologies, WebApplicationProblemDomain